Japanese EAF Mills Eye Expanding Billet Exports

Japanese electric arc furnace mills are aiming to lift their billet exports to keep their operation ratios stable now that domestic demand for their semis is slowing. But mini mill and trading house sources say the steelmakers are struggling against lower bid prices and stagnated demand from overseas customers.

Current bid prices for Japan-origin SS400 or SD390 120-150mm billets are around USD 370-380/MT CFR East Asia, while the target price of the Japanese suppliers is around USD 390/MT CFR, both down USD 10-20/MT on week, trader sources in Tokyo said Wednesday. South Korea, Taiwan, and to a lesser extent, China, are regular buyers of Japanese billets, Mysteel Global notes.

But billet prices are expected to drop further under the pressure of much lower offers by Russian suppliers, one of the Tokyo traders warned. They will have to abandon hopes of exporting when asking prices of overseas customers drop to this level," he added.

The lowest price the Japanese mills would be able to accept would be around USD 360-370/MT CFR East Asia. "The mills will not be able to make any profit but they can maintain certain throughput volume in their furnaces and casting shops to keep efficient production and to cover the drop in domestic finished steel demand," the trader said.

A sales official from a Kansai-based mini mill said that the Philippines had been an aggressive buyer of Japanese billet but that since late March when the country entered a lockdown over the COVID-19 spread, buying activity has stalled markedly. South Korea, another major buyer of Japanese semis, has been eyeing very low prices, so few Japanese mills are interested in selling to South Korea for now. "Because of this, many billet suppliers in Japan are now concentrating their export push on Taiwan," he said.

Japan exported a total of 101,637 MT of billet in February, up 44.6% Y-o-Y and 39% from January, according to the latest data by Trade Statistics of Japan. The average billet export price was Yen 43,578/MT (USD 398/MT) FOB, lower by a large Yen 8,249/MT from a year ago and down Yen 334/MT from January.

By country/area, Japan's billet export to Taiwan in February jumped to 40,338 MT, up by 308.2% Y-o-Y and by 89% from January, while those to South Korea totalled 27,727 MT, down 3.5% Y-o-Y but up 38.9% M-o-M.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.